LONDON (Reuters) – Oil prices fell on Thursday as U.S. fuel inventories rose despite efforts by OPEC to cut production.
Brent crude oil was down 75 cents at $56.19 a barrel by 1340 GMT. U.S. light crude was $1.00 lower at $50.30. Both benchmarks have risen more than 20 percent from their lows in June as world oil markets tightened.
U.S. crude stocks rose by 3.1 million to 468.5 million barrels last week, according to the American Petroleum Institute.
Official U.S. inventory data was due to be published later on Thursday by the Energy Information Administration (EIA).
The Organization of the Petroleum Exporting Countries and other producers, including Russia, agreed last year to reduce output by 1.8 million barrels per day (bpd) to prop up prices.
The cuts have helped deplete global fuel inventories, but stocks are still high and well above the five-year average, a target that OPEC has said it wants to reach in order to balance the market.
High U.S. production is pushing increasing volumes of U.S. crude into world markets, feeding inventories and undermining OPEC’s efforts to tighten the market C-OUT-T-EIA.
The International Energy Agency said on Thursday demand for OPEC oil would be 32.5 million bpd next year – around 150,000 bpd lower than the group pumped last month.
Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt, said the tone of the IEA report was bearish because it suggested that demand for OPEC crude next year would not be sufficient to absorb all the available supplies.
“This means OPEC must deepen its production cuts to finish its job of bringing oil stocks back to the five-year average,” Fritsch said.
The OPEC-led deal helped lift oil from below $30 a barrel early last year. But traders say supplies remain ample and OPEC is widely expected to extend its cuts beyond the current expiry date of end-March 2018.
“There is little doubt that leading producers have re-committed to do whatever it takes to underpin the market,” the IEA said in a report on Thursday.
Many analysts expect Brent to stay between $50 and $60 a barrel as long as global markets stay balanced.
“Our updated global supply-demand balance … shows peak stock draws in 3Q17,” Goldman Sachs said in a note to clients.
The U.S. bank said oil supply and demand fundamentals meant it expected Brent to average $58 a barrel in 2018.